©  The Author(s) Journal Compilation ©  Blackwell Publishing Ltd,  Garsington Road, Oxford OX DQ , UK and  Main Street, Malden, MA , USA S P & A  0144–5596 DOI: 10.1111/j.1467-9515.2007.00589.x V. 42, N. 1, F 2008, . 77–101 Blackwell Publishing Ltd Oxford, UK SPOL Social Policy & Administration - © Blackwell Publishing Ltd.  XXX Original Articles Social Policy & Administration Vol. , No.  xxx  Social Policy & Administration Vol. , No.  xxx  Market Forces for the Unemployed? Training Vouchers in Germany and the USA Lena Hipp and Mildred E. Warner Abstract Vouchers are meant to increase competition and consumer choice in public service markets. Using the example of training vouchers for the unemployed in the USA and Germany, we show, however, that deficits, both on the demand and the supply side of the market, create problems with preference alignment and market formation. Information asymmetries undermine choice by the unemployed and reduce government control over the training system. Ironically, restrictions meant to compensate for these information deficits further inhibit competitive market formation. Evaluation data on training vouchers from both countries show that voucher systems do not increase choice, but weaken the partnerships public employment agencies previously had with training providers, and may lead to a shortage of high-quality and specialized training, as well as creaming in the selection of training participants. Theoretical justification for vouchers is based on the notion of choice and consumer sovereignty. Using this framework to analyse the changed relationship between govern- ment, private training providers, and jobseekers, we challenge the efficacy of vouchers as a delivery mechanism in complex public service markets such as job training. Keywords Consumer choice; Privatization; Training; Vouchers; Germany; USA Introduction In recent years national governments have increased their reliance on private service provision when reforming their public employment services (Thuy et al. ; Schmid ; Sol and Westerfeld ). Germany and the USA, for example, have recently introduced training vouchers for the unemployed. In the USA, the Workforce Investment Act (WIA) of , reauthorized in , requires local workforce agencies to use Individual Training Accounts (ITA) to provide training for unemployed persons. In Germany, training vouchers, the so-called Bildungsgutscheine, were introduced as part of the Hartz Reforms 1 in . Address for correspondence: Lena Hipp, School of Industrial and Labor Relations,  Ives Hall, Cornell University, Ithaca, NY , USA. Email: lh@cornell.edu